Strong dollar a bonus for PC buyers

Computer hardware buyers are enjoying the benefits of a strong currency, which analyst IDC says is having a particular impact on notebook computer sales.

Computer hardware buyers are enjoying the benefits of a strong currency, which analyst IDC says is having a particular impact on notebook computer sales.

Auckland District Health Board is one organisation appreciating the windfall effect on prices.

“Our contract negotiations are based on the margin a vendor would make and when our purchasing power increases, the cost decreases,” says CIO Steven Mayo-Smith.

The same can’t be said of software, however.

“With software, a lot of the companies we deal with are in New Zealand, with rates set in New Zealand dollars.”

IDC hardware analyst Sonja Olsson says the high rate of the New Zealand dollar against the US currency — last week it was nudging 65US cents — is pushing PC sales.

“The impact is that most vendors can source components more cheaply from overseas and that makes it possible to bring prices down.”

IDC’s forecast for the 2003 year is for a 3.5% decline in market value from 2002, “despite the large growth in units”.

The anomaly is due to the currency, “which has allowed vendors to reduce their prices; margins are a lot smaller and value has declined”.

HP personal systems group general manager Donna Fyfe says the exchange rate is something HP always factors into its pricing, but is one of many variables.

“We monitor it closely and adjust as necessary.”

There has been some “pricing action” recently at HP, “driven by the exchange rate and other factors”.

Microsoft New Zealand dropped its prices 10% across the board in May in response to the rising dollar, marketing director Tony Ward says.

“At this stage, we’re watching the dollar very carefully.”

Ward says the company doesn’t want to drop prices only to see the dollar weaken, for it then to have to lift prices again.

Generally, the soaring dollar isn’t having the same impact on software as hardware, because the nature of the product is quite different, says Graeme Muller, who tracks software for IDC.

“The majority of the software market in New Zealand is quite mature and most revenue comes from maintenance.”

Software is generally priced according to what the local market will stand, he says.

“Hardware is becoming more competitive, more of a commodity, but if you look at the typical price of a piece of software in different countries, it’s priced quite differently.

“We don’t see a lot of price competition in software.”

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